Citi analysts Muzhi Li, Ravi Sarathy, and Gregory Zhao explain Baidu’s stance for us: download volume for location-based services (LBS) and lifestyle apps is small, but demand for such apps is huge, creating a discrepancy – and therefore a market – for Baidu.

In the analysts’ own words:

Downloaded volume of location-based services (LBS) and lifestyle apps ranked No. 11 out of 13 categories listed by Baidu. Average user time spent on LBS and lifestyle apps in 2Q13 was 8 minutes per day, ranking 10 out of 13 categories. LBS is among the three categories of least mobile adopted web services, with only 38% of web content available on mobile web pages, vs. 89% in search, 62% in e-commerce, and 45% in portals.

[But] lifestyle-related search (such as looking for restaurant, local services, group buy, etc.) was the second-largest mobile search category.

Baidu’s “lightapp” developer model is to assist low-frequency app developers [of LBS and lifestyle apps], rather than high-frequency ones such as games and SNS, to become searchable, to increase user loyalty, and to improve monetization by app developers.

Citi has a Buy on Baidu, with target price of $167. Baidu last traded at $139.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. The Barrons.com Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools.